School Finance – The County Board Policy Perspective in Budgeting and Financial Oversight and Management

1. WVSBA Orientation ’14 Waterfront Place Hotel Morgantown, WV June 24, 2014 J. P. Mowery, CPA Treasurer- Pendleton County Schools David McClure Treasurer- Greenbrier County Schools School Finance – The County Board Policy Perspective in Budgeting and Financial Oversight and Management

2. Balanced Budget? • Wisely Managing Resources? • Planning for the Future? • Statutory Component? Fiscal Responsibility

3. 1. Liable to be required to give account, as of one's actions or of the discharge of a duty or trust. • 2. Involving personal accountability or ability to act without guidance or superior authority • 3. Able to be trusted or depended upon; reliable. • 4. Based on or characterized by good judgment or sound thinking • 5. Having the means to pay debts or fulfill obligations. Responsible

4. A county board of education and a county superintendent shall comply with the instructions of the state board of school finance and shall perform the duties required of them in accordance with the provisions of this article. WV Code 18-9b-17

5. 18-4-10 • The county superintendent shall:(1) Act as the chief executive officer of the county board….. and, under the direction of the state board, execute all its education policies. Superintendent

6. 18-9-6 • The treasurer is the fiscal officer of the board, or an employee commonly designated as the person in charge of the financial affairs of the county board. Treasurer

7. Board of Education • Superintendent – Administrative Degree • Treasurer – Business Degree; CPA • Other Stakeholders – Other Administrators, Employees, Public How Do They Interact?

8. What is a budget? • A document with numbers prepared by school board treasurer? • It is a necessary tool to guide the school system. • It is not just an annual event. Budget

9. WV Code 18-9b-5 • The board of finance shall formulate and prescribe a uniform system of school district budgeting for the use of all county school districts… Budget

10. Budgeting is the accepted method for governments to allocate scarce resources to demanded services. As a result, it is a powerful tool and one of the most important governmental processes…As the focal point for key resource decisions, the budget process can help governments make better financial and program decisions, improve operations, and enhance relations with citizens and stakeholders. -- National Advisory Council on State and Local Budgeting - Budgeting

11. Planning • Public Involvement • Legal – The legal basis for spending public funds • Control – Monitoring • Evaluation/Accountability Purposes of a Budget

12. To translate the school district’s educational priorities into program and financial terms—within available fiscal resources and legal constraints. Budget – Primary Purpose

13. Budget planning is a deliberate action. • It should provide a perspective on what has been done, what is now being done and what should be done in relationship to available resources. • Completion of the budget document does not terminate the planning process. Constant monitoring and updating is necessary. Budget

14. Goals, Vision, Mission • Needs Identified • Needs versus Wants • Programs Items to Consider

15. Programs • Revenues (available resources) • Expenditures • Trends -- Present, Past, Future Where It Really Matters

16. Local • State • Federal Primary RevenueSources

17. Local Tax Sources • Regular Levy • Excess Levy • Other Levies • Local Share • Other Revenue

18. Legislature sets regular levy rates • Statutory Requirements/Timelines • Local Share – Requirements • Excess Levy Regular Tax Levy

19. Approximately 43 out of 55 Counties • Communicate Needs • It Can Not be Driven by the Board Members or by Administration Excess Levy

20. 9% Kept for Local Needs • SB 541 • Competition for Funds • Assessors’ Role Local Share

21. Example – State Funding Formula (Step 10) indicates $10,000,000 to fund school system. • Local taxes for education are $2,000,000 • 9% X $2,000,000 = $180,000 • $10,000,000 - $1,820,000 = $8,180,000 state funding • School System Receives $2,000,000 local taxes, $8,180,000 state funding and receives a total of $10,180,000. Local Share

22. State Tax Sources • State Aid – Driven by Enrollment • State Grants • Special Education • Alternative Education • – School Building Authority • – Technology Allocations • -- Other Revenue

23. Federal Tax Sources Programs • Special Education • Title 1, Title 2 • Child Nutrition • E-Rate • Other Revenue

24. Enrollment is the engine that drives state funding. • Trends, Projections… • 1st Month Enrollment (Mid September) • 2nd Month Enrollment (Mid October) -- Snapshot State Funding - Enrollment

25. Personnel • 80 to 90 Percent of Expenditures • Think Through Personnel Actions Carefully • Superintendent Makes Recommendations • Annual Expense Expenditures

26. Personnel • Operations • Utilities, Textbooks, Supplies, Equipment, Maintenance, Capital Improvements, Transportation • Fixed • Variable Expenditures

27. Generated by the WVDE Office of School Finance • Preliminary Usually Available in December • Very Important • State Funding Formula Preliminary/Final Computations

28. Step 1 – Allowance for Professional Educators • Step 2 – Allowance for Service Personnel • Step 3 – Allowance for Fixed Costs • Step 4 – Allowance for Transportation State Funding Formula

29. Step 5 – Allowance for Professional Student Support Personnel • Step 6a – Allowance for Other Current Expense • Step 6b – Allowance for Professional Personnel Substitute Costs • Step 6c – Allowance for Service Personnel Substitute Costs • Step 6d – Allowance for Faculty Senates State Funding Formula

30. Step 7(a) – Allowance for Improvement of Instructional Programs • Step 7b – Allowance for 21st Century Technology Systems – WVDE Office of Technology • Step 7c – Allowance for Advanced Placement Programs • Step 8 -- Total Basic Program Allowance State Funding Formula

31. Step 9 – Local Share – Subtract 90% (91%) of Local Property Tax Levy • Be Aware of Assessed Valuation Requirements • Step 10 – Basic State Allowance for County Boards State Funding Formula

32. Necessary Throughout the Year • Circumstances Change • Ask Questions Budget RevisionsWV Code 18-9B-10

33. Funds expended only for purposes which raised WV Code 11-8-25

34. Unlawful expenditures by local fiscal body -- A local fiscal body shall not expend money or incur obligations: • In an unauthorized manner; • For an unauthorized purpose; • In excess of the amount allocated to the fund in the levy order; • In excess of the funds available for current expenses. WV Code 11-8-26

35. ** A local fiscal body or its duly authorized officials shall not be penalized for a casual deficit which does not exceed its approved levy estimate by more than three percent, provided such casual deficit be satisfied in the levy estimate for the succeeding fiscal year.. WV Code 11-8-26 (continued)

36. Provided, however, That in calculating a deficit for purposes of this section, account shall not be taken of any amount for which the local fiscal body may be liable for the unfunded actuarial accrued liability of the West Virginia Retiree Health Benefit Trust (RHBT) Fund or any amount allocated to the local fiscal body as an employer annual required contribution that exceeds the minimum annual employer payment component of the contribution WV Code 11-8-26 (continued)

37. (q) "Casual deficit" means a deficit of not more than three percent of the approved levy estimate or a deficit that is nonrecurring from year to year. WV Code 18-1-1

38. Fund Balance Handout WV Code 18-1-1

39. State Board of Education Office of Education Performance Audits Consequences

40. Whenever a county board has more than a casual deficit, as defined in section one, article one of this chapter, the county board shall submit a plan to the state board specifying the county board's strategy for eliminating the casual deficit. The state board either shall approve or reject the plan. 18-2e-5

41. Whenever non-approval status is given to a school system, the state board shall declare a state of emergency in the school system and shall appoint a team of improvement consultants to make recommendations within sixty days of appointment for correcting the emergency. 18-2e-5

42. Personal liability of official participating in unlawful expenditure • A person who in his official capacity negligently participates in the violation of either section twenty-five or section twenty-six of this article shall be personally liable, jointly and severally, for the amount illegally expended. WV Code 11-8-29

43. Recovery of unlawful expenditure from participating official by action; costs • A person who in his official capacity negligently participates in an illegal expenditure may be proceeded against for the recovery of the amount illegally expended. The political subdivision concerned, a taxpayer of the subdivision, the state tax commissioner or a person prejudiced may bring the proceeding. WV Code 11-8-30

44. Criminal liability of official violating provisions of article; proceeding for removal. • A person who in his official capacity willfully violates the provisions of this article shall be guilty of a misdemeanor, and, upon conviction, shall be fined not more than five hundred dollars, or confined in jail not more than one year. WV Code 11-8-31

45. Certain county officials may not have a financial interest in any amount in a public contract over which their public position gives them voice, influence or control. • Hardship waivers “may” be granted. WV Code 61-10-15 – Pecuniary Interest Statute

46. Criminal liability of official violating provisions of article; proceeding for removal. • A person who in his official capacity willfully violates the provisions of this article shall be guilty of a misdemeanor, and, upon conviction, shall be fined not more than five hundred dollars, or confined in jail not more than one year. WV Code 11-8-31

47. Monitoring the financial condition of a school system is a year-round process. • Reports at Board Meetings • Reports at LSIC/Faculty Meetings • Media Outlets • Public Involvement Monitoring the Fiscal Condition

48. Financial/Budget Updates at Each Board Meeting. • Treasurer’s Report • Statement of Cash Flows • Budget to Actual Comparative Data • Trends • Ask Questions Ways for Board Members to Stay Informed

49. Financial/Budget Updates at Each Board Meeting. • Approval of the Bills Ways for Board Members to Stay Informed

50. Reduce Expenditures • Reduce Personnel Over The Formula • Including Professional Over 200 Days, Supplemental Pay, etc. • Reduce Operating Expenditures – Energy Savings, Supplies, etc. • Increase Revenue • Excess Levy, • Other? • Communicate Clearly How to Handle Financial Difficulties